[Federal Register Volume 88, Number 128 (Thursday, July 6, 2023)]
[Notices]
[Pages 43087-43101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14197]


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BUREAU OF CONSUMER FINANCIAL PROTECTION


Fair Lending Report of the Consumer Financial Protection Bureau, 
June 2023

AGENCY: Consumer Financial Protection Bureau.

ACTION: Fair Lending Report of the Consumer Financial Protection 
Bureau.

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SUMMARY: The Consumer Financial Protection Bureau (CFPB) is issuing its 
eleventh Fair Lending Report of the Consumer Financial Protection 
Bureau (Fair Lending Report) to Congress. The CFPB is committed to 
ensuring fair, equitable, and nondiscriminatory access to credit for 
both individuals and communities. This report describes our fair 
lending activities in supervision and enforcement; guidance and 
rulemaking; interagency coordination; and outreach and education for 
calendar year 2022.

DATES: The CFPB released the 2022 Fair Lending Report on its website on 
June 28, 2023.

FOR FURTHER INFORMATION CONTACT: Bobby Conner, Senior Policy Counsel, 
Fair Lending, at 1-855-411-2372. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

1. Fair Lending Enforcement and Supervision

1.1. Risk-Based Prioritization

    Because Congress charged the CFPB with the responsibility of 
overseeing many lenders and products, the CFPB has long used a risk-
based approach to prioritizing supervisory examinations and enforcement 
activity. This approach helps ensure that the CFPB focuses on areas 
that present substantial risk of credit discrimination for consumers 
and small businesses.\1\
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    \1\ For additional information regarding the CFPB's risk-based 
approach in prioritizing supervisory examinations, see section 
2.2.3, Risk-Based Approach to Examinations, Supervisory Highlights 
Summer 2013, available at https://files.consumerfinance.gov/f/201308_cfpb_supervisory-highlights_august.pdf.
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    As part of the prioritization process, the CFPB identifies emerging 
developments and trends by monitoring key consumer financial markets. 
If this field and market intelligence identifies fair lending risks in 
a particular market, that information is used to determine the type and 
extent of assets applied to address those risks.
    The prioritization process incorporates a number of additional 
factors, including tips and leads from industry whistleblowers, 
advocacy groups, and government agencies; supervisory and enforcement 
history; consumer complaints; and results from analysis of Home 
Mortgage Disclosure Act (HMDA) and other data.
    As a result of its annual risk-based prioritization process, in 
2022 the CFPB focused much of its fair lending supervision efforts on 
mortgage origination and pricing, small business lending (including 
agricultural lending), policies and procedures regarding geographic and 
other exclusions in underwriting, and on the use of automated systems 
and models, sometimes marketed as artificial intelligence and machine 
learning models.
    As in previous years, the CFPB's 2022 mortgage origination work 
continued to focus on redlining (intentional discrimination against 
applicants and prospective applicants living or seeking credit in 
minority neighborhoods, including by discouragement); assessing 
potential discrimination in underwriting and pricing processes; 
assessing whether lenders are illegally steering applicants on a 
prohibited basis; and HMDA data integrity and validation reviews (both 
as standalone exams and in preparation for subsequent Equal Credit 
Opportunity Act (ECOA) exams).

[[Page 43088]]

    The CFPB's small business lending work assessed whether there were 
disparities in application, underwriting, and pricing processes, and 
whether there were weaknesses in fair lending-related compliance 
management systems.
    Across multiple markets, the CFPB assessed whether lenders complied 
with the adverse action notice requirements of ECOA and Regulation B 
and evaluated whether lenders maintain policies and procedures that 
exclude property on the basis of geography in underwriting decisions 
and to ensure those policies and procedures do not unlawfully exclude 
certain types of income.
    The CFPB continued to expand its evaluation of automated systems 
and models, sometimes marketed as artificial intelligence and machine 
learning models, as used by institutions, including in evaluating 
applicants for credit.
1.2. Fair Lending Enforcement
    Congress authorized the CFPB to bring actions to enforce the 
requirements of eighteen enumerated statutes, including ECOA, HMDA, and 
the Consumer Financial Protection Act of 2010 (CFPA), which prohibits 
unfair, deceptive, and abusive acts or practices (UDAAPs). The CFPB 
engages in research, conducts investigations, files administrative 
complaints, holds hearings, and adjudicates claims through the CFPB's 
administrative enforcement process. The CFPB also uses its independent 
litigation authority to file cases in Federal court alleging violations 
of fair lending laws under the CFPB's jurisdiction. Like other Federal 
regulators, the CFPB is required to refer matters to the Department of 
Justice (DOJ) when it has reason to believe that a creditor has engaged 
in a pattern or practice of lending discrimination.\2\
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    \2\ See 15 U.S.C. 1691e(g).
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1.2.1. Public Enforcement Actions
    In 2022, the CFPB announced one fair lending-related enforcement 
action, Trident Mortgage Company, LP (Trident).\3\ On July 27, 2022, 
the CFPB, together with the DOJ, filed a complaint and proposed consent 
order in the United States District Court for the Eastern District of 
Pennsylvania to resolve the agencies' allegations against Trident. The 
court entered the order on September 14, 2022. Trident is incorporated 
in Delaware and had locations in Delaware, New Jersey, and Pennsylvania 
at the time of the alleged conduct. Before the complaint was filed, 
Trident ceased originating mortgages. The States of Delaware, New 
Jersey, and Pennsylvania entered into concurrent agreements with 
Trident. The CFPB and DOJ's joint complaint alleged that Trident 
engaged in unlawful discrimination on the basis of race, color, and 
national origin against applicants and prospective applicants, 
including by redlining majority-minority neighborhoods in the 
Philadelphia-Camden-Wilmington Metropolitan Statistical Area 
(Philadelphia MSA) and engaged in acts and practices directed at 
prospective applicants that would discourage prospective applicants 
from applying for credit in violation of ECOA, Regulation B, and the 
CFPA. DOJ also alleged that Trident's conduct violated the Fair Housing 
Act (FHA). As part of remediation, the order requires Trident to invest 
$18.4 million in a loan subsidy program under which Trident will 
contract with a lender to increase the credit extended in majority-
minority neighborhoods in the Philadelphia MSA and make loans under the 
loan subsidy fund. That lender must also maintain at least four 
licensed branch locations in majority-minority neighborhoods in the 
Philadelphia MSA. Trident must also fund targeted advertising to 
generate applications for credit from qualified consumers in majority-
minority neighborhoods in the Philadelphia MSA and take other remedial 
steps to serve the credit needs of majority-minority neighborhoods in 
the Philadelphia MSA. Trident must also pay a civil money penalty of $4 
million. This settlement is the first Federal government resolution 
involving illegal lending discrimination by a nonbank mortgage lender.
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    \3\ Consumer Fin. Prot. Bureau, CFPB, DOJ Order Trident Mortgage 
Company to Pay More Than $22 Million for Deliberate Discrimination 
Against Minority Families (July 27, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/.
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1.2.2. ECOA Referrals to Department of Justice
    The CFPB must refer to DOJ a matter when it has reason to believe 
that a creditor has engaged in a pattern or practice of lending 
discrimination in violation of ECOA.\4\ The CFPB may refer other 
potential ECOA violations to DOJ as well.\5\ In 2022, the CFPB referred 
five matters to DOJ about discrimination pursuant to section 706(g) of 
ECOA. The referrals included four matters involving discrimination on 
the basis of race and national origin in mortgage lending (redlining) 
and one matter involving discrimination in underwriting mortgage loans 
on the basis of receipt of public assistance income.
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    \4\ 15 U.S.C. 1691e(g).
    \5\ Id.
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1.2.3. Implementing Enforcement Orders
    When an enforcement action is resolved through a public enforcement 
order, the CFPB (together with other government entities, when 
relevant) takes steps to ensure that the respondent or defendant 
complies with the requirements of the order. Depending on the specific 
requirements of individual public enforcement orders, the CFPB may take 
steps to ensure that borrowers who are eligible for compensation 
receive remuneration and that the defendant has complied with the 
injunctive provisions of the order, including implementing a 
comprehensive fair lending compliance management system.
1.2.4. Pending Fair Lending Enforcement Investigations
    In 2022, the CFPB had a number of ongoing and newly opened fair 
lending investigations of institutions. The CFPB investigated or is 
actively investigating potential discrimination in several markets, 
including student lending, payday lending, credit cards, small business 
lending, and mortgage lending, including the unlawful practices of 
redlining and discriminatory targeting, as well as discrimination in 
home valuation and mortgage pricing exceptions. In 2022, the CFPB also 
investigated issues with HMDA reporting. The CFPB is looking into 
potential discriminatory conduct, including under ECOA and the 
statutory prohibition on unfair acts or practices targeted at 
vulnerable populations and leading to bias in automated systems and 
models.

1.3. Fair Lending Supervision

    The CFPB's Supervision program assesses compliance with Federal 
consumer financial protection laws and regulations at banks and 
nonbanks over which the CFPB has supervisory authority. As a result of 
the CFPB's efforts to fulfill its fair lending mission during 2022, the 
CFPB initiated 32 fair lending examinations or targeted reviews, which 
represents a 146 percent increase in fair lending examinations/targeted 
reviews since 2020.
    For supervisory communications issued by Supervision during 2022, 
the most frequently identified issues related to the CFPB's review of 
mortgage origination underwriting policies and guidelines, particularly 
those that

[[Page 43089]]

exclude lending for properties in certain locations or geographies.
    In 2022, the CFPB issued several fair lending-related Matters 
Requiring Attention and entered Memoranda of Understanding directing 
entities to take corrective actions that the CFPB will monitor through 
follow-up supervisory actions. Examiners encouraged lenders to enhance 
oversight and identification of fair lending risk and to implement 
policies, procedures, and controls designed to effectively manage HMDA 
activities, including regarding integrity of data collection. The CFPB 
also directed mortgage lenders to correct violations relating to 
redlining, including by providing consumer remediation designed to spur 
lending in the redlined areas.
    During 2022, informed by the Director's priority to address risks 
of consumer harm from advanced and emerging technologies in consumer 
finance, the CFPB focused additional resources on advanced data science 
and analytics during exam events to identify fair lending risks and 
violations in models.

1.4. Annual Performance Plan Metrics

    Consistent with a recommendation from the Government Accountability 
Office (GAO) \6\ the CFPB re-introduced several measures and 
performance goals specific to its fair lending supervision and 
enforcement, specifically the number of fair lending supervision events 
opened during the fiscal year and the percentage of all fair lending 
enforcement cases concluded by the CFPB that were successfully resolved 
through litigation, a settlement, issuance of a default judgment, or 
other means. The CFPB will again report progress for all supervisory 
and enforcement events relating to fair lending laws within the CFPB's 
jurisdiction in subsequent years in the CFPB's Annual Performance Plan.
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    \6\ Govt. Accountability Office, CFPB Needs to Assess the Impact 
of Recent Changes to Its Fair Lending Activities (May 2021), https://www.gao.gov/assets/gao-21-393.pdf.
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2. Rulemaking and Guidance

2.1. Rulemaking

    During 2022, the CFPB continued to make progress on the small 
business lending data collection rulemaking required by Congress under 
section 1071 of the Dodd-Frank Act and participated in an interagency 
rulemaking to implement quality control standards for automated 
valuation models (AVMs). Under HMDA (Regulation C), the CFPB also 
issued a final rule amending the official commentary regarding the 
asset-size exemption threshold and a technical amendment regarding the 
coverage threshold for closed-end mortgage loans.
    The CFPB publishes an agenda of its planned rulemaking activity 
biannually, which is available at: https://www.consumerfinance.gov/rules-policy/regulatory-agenda.
2.1.1. Small Business Lending Data Collection Rulemaking
    In the Dodd-Frank Act, Congress directed the CFPB to adopt 
regulations governing the collection of small business lending data. 
Section 1071 amended ECOA to require financial institutions to compile, 
maintain, and submit to the CFPB certain data on applications for 
credit for women-owned, minority-owned, and small businesses.
    Congress enacted section 1071 for the purpose of facilitating 
enforcement of fair lending laws and enabling communities, governmental 
entities, and creditors to identify business and community development 
needs and opportunities for women-owned, minority-owned, and small 
businesses.
    The CFPB previously issued a proposed rule amending Regulation B to 
implement changes to ECOA made by section 1071.\7\ The comment period 
for this proposed rule closed on January 6, 2022. Consistent with 
section 1071, the CFPB proposed to require covered financial 
institutions to collect and to report to the CFPB data on applications 
for credit for small businesses, including those that are owned by 
women or minorities. The proposal also addressed the CFPB's approach to 
privacy interests and the publication of small business lending data, 
shielding certain demographic data from underwriters and other persons, 
recordkeeping requirements, enforcement provisions, and the proposed 
rule's effective and compliance dates.\8\
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    \7\ The proposal was published in the Federal Register on 
October 8, 2021. See 86 FR 56356.
    \8\ Additional activity has occurred since the close of this 
reporting period. On March 30, 2023, the CFPB released its final 
rule implementing section 1071. See https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/.
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    More information is available at: https://www.consumerfinance.gov/1071-rule/, a page compiling key materials related to the CFPB's small 
business lending rulemaking.
2.1.2. Automated Valuation Models Rulemaking
    The CFPB determined that the AVM rulemaking should follow the 
process set forth in the Small Business Regulatory Enforcement Fairness 
Act of 1996 (SBREFA) to obtain input from small business that are 
likely to be impacted by the proposed regulation. In 2021, the CFPB 
began the SBREFA process to consult with representatives of small 
entities likely to be affected directly by the proposed AVM rulemaking. 
On February 23, 2022, the CFPB published the Outline of Proposals and 
Alternatives Under Consideration for the Small Business Advisory Review 
Panel for Automated Valuation Model Rulemaking.\9\ To address potential 
fair lending risk in models, the proposal noted that the CFPB would 
consider proposing a requirement that covered institutions establish 
policies, practices, procedures, and control systems to ensure that 
their AVMs comply with applicable nondiscrimination laws.
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    \9\ CFPB, Small Business Advisory Review Panel for Automated 
Valuation Model (AVM) Rulemaking: Outline of Proposals and 
Alternatives under Consideration (Feb. 23, 2022), https://files.consumerfinance.gov/f/documents/_avm_outline-proposals_2022-02.pdf.
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    The CFPB is participating in this interagency rulemaking with the 
Federal Reserve Board (FRB), Office of the Comptroller of the Currency 
(OCC), Federal Deposit Insurance Corporation (FDIC), National Credit 
Union Administration (NCUA), and Federal Housing Finance Agency (FHFA) 
(collectively, the Agencies) to develop regulations to implement the 
amendments made by the Dodd-Frank Act to the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (FIRREA) concerning AVMs. 
The FIRREA amendments require implementing regulations for quality 
control standards for AVMs. These standards are designed to ensure a 
high level of confidence in the estimates produced by the valuation 
models, protect against the manipulation of data, seek to avoid 
conflicts of interest, require random sample testing and reviews, and 
account for any other such factor that the Agencies determine to be 
appropriate. The Agencies have continued to work to develop a proposed 
rule to implement the Dodd-Frank Act's AVM amendments to FIRREA.\10\
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    \10\ Additional activity has occurred since the close of this 
reporting period. On June 1, 2023, the Agencies released a proposed 
AVM rule. See https://www.consumerfinance.gov/about-us/newsroom/agencies-request-comment-on-quality-control-standards-for-automated-valuation-models-proposed-rule/.
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2.1.3. HMDA (Regulation C) Adjustment to Asset-Size Exemption Threshold
    On December 27, 2022, the CFPB issued a final rule amending the 
official

[[Page 43090]]

commentary that interprets the requirements of Regulation C to reflect 
the asset-size exemption threshold for banks, savings associations, and 
credit unions based on the annual percentage change in the average of 
the Consumer Price Index for Urban Wage Earners and Clerical 
Workers.\11\
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    \11\ CFPB, Home Mortgage Disclosure (Regulation C) Adjustment to 
Asset-Size Exemption Threshold (Dec. 27, 2022), https://files.consumerfinance.gov/f/documents/cfpb_hmda_annual-adjustments_2022-12.pdf.
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2.1.4. HMDA (Regulation C); Judicial Vacatur of Coverage Threshold for 
Closed-End Mortgage Loans
    On December 21, 2022, the CFPB issued a technical amendment to 
Regulation C to reflect the closed-end mortgage loan reporting 
threshold of 25 mortgage loans.\12\
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    \12\ CFPB, Home Mortgage Disclosure (Regulation C); Judicial 
Vacatur of Coverage Threshold for Closed-End Mortgage Loans (Dec. 9, 
2022), https://files.consumerfinance.gov/f/documents/cfpb_judicial-vacatur-_technical-amendment_2022-12.pdf.
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    In April 2020, the CFPB issued a final rule (2020 HMDA Final Rule) 
to amend Regulation C that increased the closed-end mortgage loan 
reporting threshold from 25 loans to 100 loans. On September 23, 2022, 
the United States District Court for the District of Columbia vacated 
the 2020 HMDA Final Rule as to the increased loan volume reporting 
threshold for closed-end mortgage loans. As a result of the September 
23, 2022, court order, the threshold for reporting data about closed-
end mortgage loans is the 25-loan threshold established by the 2015 
HMDA Rule. This technical amendment updates the Code of Federal 
Regulations to reflect the effective closed-end loan reporting 
threshold. For more information regarding this and other litigation 
matters, please see section 4 of this report.

2.2. Guidance

    The CFPB issues guidance to its various stakeholders in many forms, 
including Consumer Financial Protection Circulars (Circulars), advisory 
opinions, interpretive rules, statements, bulletins, publications such 
as Supervisory Highlights, and other resources to aid in compliance.
2.2.1. Consumer Financial Protection Circular 2022-03: Adverse Action 
Notification Requirements in Connection With Credit Decisions Based on 
Complex Algorithms
    On May 26, 2022, the CFPB released a Circular to remind the public, 
including those responsible for enforcing Federal consumer financial 
protection law, of creditors' adverse action notice requirements under 
ECOA.\13\ The Circular affirmed that Federal anti-discrimination law 
requires companies to explain to applicants the specific reasons for 
denying an application for credit or taking other adverse actions, even 
if the creditor is relying on credit models using complex algorithms. 
The Circular makes clear that Federal consumer financial protection 
laws, including adverse action requirements, should be enforced 
regardless of the technology used by creditors, and that creditors 
cannot justify noncompliance with ECOA based on the mere fact that the 
technology they use to evaluate credit applications is too complicated, 
too opaque in its decision-making, or too new.
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    \13\ CFPB, Consumer Financial Protection Circular 2022-03, 
Adverse action notification requirements in connection with credit 
decisions based on complex algorithms (May 26, 2022), https://www.consumerfinance.gov/compliance/circulars/circular-2022-03-adverse-action-notification-requirements-in-connection-with-credit-decisions-based-on-complex-algorithms/.
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2.2.2. Advisory Opinion Regarding ECOA and Regulation B and Revocations 
or Unfavorable Changes to the Terms of Existing Credit Arrangements
    On May 9, 2022, the CFPB issued an advisory opinion affirming that 
ECOA bars lenders from discriminating against applicants after they 
have received a loan, not just during the application process.\14\ The 
advisory opinion and accompanying analysis clarify that ECOA protects 
borrowers from discrimination in all aspects of a credit transaction. 
The advisory opinion is consistent with a legal brief filed in 2021 by 
the CFPB, the Federal Trade Commission (FTC), the FRB, and DOJ.\15\ 
Among other things, the advisory opinion affirms that ECOA and 
Regulation B protect applicants who have received credit and are 
existing account holders, not just those in the process of applying for 
credit. In addition, the advisory opinion explains that creditors must 
provide adverse action notices to applicants against whom they take 
adverse action, and that certain adverse actions--such as revoking 
existing credit or changing the terms of an existing credit 
arrangement--are only actions that can be taken against applicants who 
have already received credit.
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    \14\ CFPB, Equal Credit Opportunity (Regulation B); Revocations 
or Unfavorable Changes to the Terms of Existing Credit Arrangements 
(May 5, 2022), https://files.consumerfinance.gov/f/documents/cfpb_revoking-terms-of-existing-credit-arrangement_advisory-opinion_2022-05.pdf.
    \15\ Fralish v. Bank of America, N.A., Brief amicus curiae of 
Consumer Fin. Prot. Bureau, Dept. of Justice, Bd. Of Governors of 
the Fed. Reserve System, and Fed. Trad Comm'n (Dec. 16, 2021), 
https://files.consumerfinance.gov/f/documents/cfpb_fralish-v-bank-of-america_amicus-brief_2021-12.pdf.
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2.2.3. Interpretive Rule on the Limited Applicability of CFPA's ``Time 
or Space'' Exception With Respect to Digital Marketing Providers
    On August 10, 2022, the CFPB issued an interpretive rule clarifying 
when digital marketing providers for financial firms must comply with 
Federal consumer financial protection law.\16\ Section 1002 of the CFPA 
defines the term ``service provider'' and sets forth two exceptions to 
that definition. Under one of those exceptions, a person is not a 
service provider solely by virtue of such person offering or providing 
to a covered person time or space for an advertisement for a consumer 
financial product or service through print, newspaper, or electronic 
media. As explained in the interpretive rule, digital marketers that 
are involved in the identification or selection of prospective 
customers or the selection or placement of content to affect consumer 
behavior do not fall under this narrow exception and thus are typically 
service providers for purposes of the law. Digital marketers acting as 
service providers can be held liable by the CFPB or other law enforcers 
for committing unfair, deceptive, or abusive acts or practices as well 
as other consumer financial protection violations. The interpretive 
rule explains that digital marketers provide material services to 
financial firms and that the CFPB, along with other consumer protection 
enforcers, can sue digital marketers to stop violations of consumer 
financial protection law.
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    \16\ CFPB, Interpretive rule on the Limited Applicability of 
Consumer Financial Protection Act's ``Time or Space'' Exception with 
Respect to Digital Marketing Providers (Aug. 10, 2022), https://files.consumerfinance.gov/f/documents/cfpb_time-or-space_interpretive-rule_signed_2022-08.pdf.
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2.2.4. Supervisory Highlights
    The CFPB's Supervisory Highlights reports provide guidance and 
general information about the CFPB's supervisory activities at banks 
and nonbanks without identifying specific entities. These reports 
communicate the CFPB's key examination findings and operational changes 
to the CFPB's supervision program. Supervisory Highlights is also a 
convenient and easily accessible resource for information on the CFPB's 
recent guidance documents. In 2022, the CFPB

[[Page 43091]]

published three issues of Supervisory Highlights.\17\
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    \17\ Issue 26, Spring 2022; Issue 27, Supervisory Highlights 
Student Loan Servicing Special Edition, Fall 2022; Issue 28, Fall 
2022.
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    On May 2, 2022, the CFPB released the 26th edition of Supervisory 
Highlights.\18\ The findings included in this report cover examinations 
completed between July 2021 and December 2021 in the areas of auto 
servicing, consumer reporting, credit card account management, debt 
collection, deposits, mortgage origination, prepaid accounts, 
remittances, and student loan servicing.\19\ This report also discussed 
the publication of the CFPB's updated exam manual for evaluating 
UDAAPs, explaining that the updates cover discriminatory practices that 
may also be ``unfair'' under the CFPA.
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    \18\ CFPB, Issue 26, Spring 2022 (May 2, 2022), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-26_2022-04.pdf/.
    \19\ Id.
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    A special edition of Supervisory Highlights, Issue 27, Student Loan 
Servicing Special Edition, Fall 2022, was released on September 29, 
2022.\20\ This report focused on specific supervisory findings unique 
to the student loan market.
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    \20\ CFPB, Issue 27, Student Loan Servicing Special Edition, 
Fall 2022 (Sept. 29, 2022), https://files.consumerfinance.gov/f/documents/cfpb_student-loan-servicing-supervisory-highlights-special-edition_report_2022-09.pdf.
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    The CFPB released the 28th edition of Supervisory Highlights on 
November 16, 2022, covering examinations completed between January 2021 
and June 2021.\21\ This report included the fair lending enforcement 
matter, Trident, which the CFPB's supervisory activities supported. For 
more information on the Trident matter, please see section 1.2.1 above.
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    \21\ Consumer Fin. Prot. Bureau, Issue 28, Fall 2022 (Nov. 16, 
2022), https://files.consumerfinance.gov/f/documents/cfpb_supervisory-highlights_issue-28_2022-11.pdf.
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    All issues of Supervisory Highlights are available at: https://www.consumerfinance.gov/compliance/supervisory-highlights/.
2.2.5. HMDA Guidance and Resources
    Given the importance of accurately reported HMDA data to the CFPB's 
fair lending mission, the CFPB maintains a comprehensive suite of 
resources on its public website to help filers fulfill their reporting 
requirements under HMDA and Regulation C and to allow others to 
evaluate and study mortgage lending. These resources include: an 
Executive Summary of HMDA rule changes; \22\ Small Entity Compliance 
Guide; \23\ Key Dates Timeline; \24\ Institutional and Transactional 
Coverage Charts; \25\ Reportable HMDA Data Chart; \26\ sample data 
collection form; \27\ FAQs,\28\ a new Beginners Guide to Accessing and 
Using HMDA Data,\29\ and downloadable webinars,\30\ which provide an 
overview of the HMDA rule. In 2022, the CFPB published a summary of the 
2021 data on mortgage lending.\31\ The CFPB also provides on its 
website an interactive version of Regulation C that is easier to access 
and navigate than the printed version of Regulation C.\32\
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    \22\ CFPB, Executive Summary of the 2020 Home Mortgage 
Disclosure Act (Regulation C) Final Rule (Apr. 16, 2020), https://files.consumerfinance.gov/f/documents/cfpb_rule-executive-summary_hmda-2020.pdf.
    \23\ CFPB, Home Mortgage Disclosure (Regulation C) Small Entity 
Compliance Guide (Feb. 2023), https://files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide_2023-02.pdf.
    \24\ CFPB, HMDA Rule Key Dates Timeline, January 1, 2020 to 
December 31, 2022, https://files.consumerfinance.gov/f/documents/cfpb_hmda-key-dates-timeline-2020-2022.pdf.
    \25\ CFPB, HMDA Institutional Coverage Chart, https://files.consumerfinance.gov/f/documents/cfpb_hmda-institutional-coverage_2023.pdf; Consumer Fin. Prot. Bureau, HMDA Transactional 
Coverage Chart, https://files.consumerfinance.gov/f/documents/cfpb_hmda-transactional-coverage_2023.pdf.
    \26\ CFPB, Reportable HMDA Data: A Regulatory and Reporting 
Overview Reference Chart for HMDA Data Collected in 2023,https://files.consumerfinance.gov/f/documents/cfpb_reportable-hmda-data_regulatory-and-reporting-overview-reference-chart_2023-02.pdf.
    \27\ CFPB, Sample Data Collection Form, https://files.consumerfinance.gov/f/documents/201708_cfpb_hmda-sample-data-collection-form.pdf.
    \28\ CFPB, Home Mortgage Disclosure Act FAQs, https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/home-mortgage-disclosure-act-faqs/.
    \29\ CFPB, A Beginner's Guide to Accessing and Using Home 
Mortgage Disclosure Act Data (June 13, 2022), https://files.consumerfinance.gov/f/documents/cfpb_beginners-guide-accessing-using-hmda-data_guide_2022-06.pdf.
    \30\ CFPB, HMDA Webinars, https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/hmda-reporting-requirements/webinars/.
    \31\ CFPB, Summary of 2021 Data on Mortgage Lending (June 16, 
2022), https://www.consumerfinance.gov/data-research/hmda/summary-of-2021-data-on-mortgage-lending/.
    \32\ See Interactive Bureau Regulations, Regulation C, https://www.consumerfinance.gov/rules-policy/regulations/1003/.
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    Together with the Federal Financial Institutions Examination 
Council (FFIEC),\33\ the CFPB also routinely updates its HMDA resources 
throughout the year to ensure HMDA reporters have the most up-to-date 
information. For example, in September 2022, the CFPB released the 2023 
Filing Instructions Guide \34\ and the 2023 Supplemental Guide for 
Quarterly Filers.\35\ Together with the FFIEC, in February 2022, the 
CFPB also published the 2022 edition of the HMDA Getting it Right 
Guide.\36\ The CFPB also works with the FFIEC to publish data 
submission resources for HMDA filers and vendors on its Resources for 
HMDA Filers website, https://ffiec.cfpb.gov.
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    \33\ Collectively, the Board of Governors of the Federal Reserve 
System (FRB), the Federal Deposit Insurance Corporation (FDIC), the 
National Credit Union Administration (NCUA), the Office of the 
Comptroller of the Currency (OCC), and the CFPB comprise the Federal 
Financial Institutions Examination Council (FFIEC). The State 
Liaison Committee was added to FFIEC in 2006 as a voting member. 
Federal Fin. Instit. Examination Council, http://www.ffiec.gov (last 
visited May 15, 2023).
    \34\ CFPB, Filing instructions guide for HMDA data collected in 
2023 (Sept. 2, 2022), https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2023-hmda-fig.pdf.
    \35\ CFPB, Supplemental Guide for Quarterly Filers for 2023 
(Sept. 2, 2022), https://s3.amazonaws.com/cfpb-hmda-public/prod/help/supplemental-guide-for-quarterly-filers-for-2023.pdf.
    \36\ Federal Fin. Instit. Examination Council, A Guide to HMDA 
Reporting, Getting it Right! (Feb. 28, 2022), https://www.ffiec.gov/hmda/pdf/2022Guide.pdf.
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    In addition, HMDA reporters can ask questions about HMDA and 
Regulation C, including how to submit HMDA data, by emailing the CFPB's 
HMDA Help at [email protected]. The CFPB also offers financial 
institutions, service providers, and others informal staff guidance on 
specific questions about the statutes and rules the CFPB implements, 
including ECOA and Regulation B and HMDA and Regulation C, through its 
Regulation Inquiries platform at www.reginquiries.consumerfinance.gov.

3. Stakeholder Engagement

    The CFPB engages with external stakeholders, including consumer 
advocates, civil rights organizations, industry, academia, and other 
government agencies. This engagement comes in varied forms, including 
broadcasting the CFPB's work and policy priorities through CFPB 
channels like blogs, press releases, or speeches; and reaching out 
directly to advocates and consumers through website updates and social 
media. The CFPB also regularly issues reports analyzing data and market 
conditions. To further an all-of-government approach to fair lending 
enforcement, the CFPB also participates in interagency groups. All of 
these engagements are critical to informing the CFPB's work and 
broadcasting the CFPB's priorities and recent work to its stakeholders.

3.1. Promoting and Broadcasting the Fair Lending and Access to Credit 
Mission

3.1.1. CFPB Blog Posts, Press Releases, and Other Communications
    The CFPB regularly uses blog posts, statements, press releases, 
guides, brochures, social media, and other tools to timely and 
effectively communicate

[[Page 43092]]

with stakeholders. These tools are targeted to individuals, advocates, 
civil rights organizations, government agencies, tribal entities, small 
business owners, financial institutions, and other stakeholders to 
promote and broadcast news and information about emerging fair lending 
issues, areas of concern, CFPB initiatives, and more.
    In 2022, the CFPB published 12 blog posts related to fair lending 
topics including: examination findings that some financial companies 
are unlawfully considering religion when making decisions on financial 
products; \37\ a joint letter sent to The Appraisal Foundation 
regarding appraisal discrimination; \38\ a new initiative to focus on 
financial issues facing rural communities; \39\ announcing efforts to 
further crack down on discrimination in the financial sector; \40\ 
announcing the publication of the 2021 Fair Lending Annual Report to 
Congress; \41\ providing Spanish-speaking customers with Spanish-
language disclosures; \42\ announcing the publication of the Beginner's 
Guide to Accessing and Using Home Mortgage Disclosure Act Data; \43\ 
identifying and addressing the financial needs of immigrants; \44\ the 
Interagency Statement on Special Purpose Credit Programs Under ECOA and 
Regulation B; \45\ challenging inaccurate appraisals through the 
reconsideration of value process; \46\ research about higher interest 
rates leading to higher debt burdens for mortgage borrowers; \47\ and 
changes relating to HMDA's closed-end loan reporting threshold.\48\
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    \37\ Lorelei Salas, It's illegal to penalize borrowers for being 
religious (Jan. 14, 2022), https://www.consumerfinance.gov/about-us/blog/its-illegal-penalize-borrowers-being-religious/.
    \38\ Patrice Alexander Ficklin, Appraisal discrimination is 
illegal under federal law (Feb. 4, 2022), https://www.consumerfinance.gov/about-us/blog/appraisal-discrimination-illegal-under-federal-law/.
    \39\ Shawn Sebastian, New effort focused on financial issues 
facing rural communities (Mar. 10, 2022), https://www.consumerfinance.gov/about-us/blog/new-effort-focused-on-financial-issues-facing-rural-communities/.
    \40\ Eric Halperin, Lorelei Salas, Cracking down on 
discrimination in the financial sector (Mar. 16, 2022), https://www.consumerfinance.gov/about-us/blog/cracking-down-on-discrimination-in-the-financial-sector/.
    \41\ Rohit Chopra, The CFPB's 2021 Fair Lending Annual Report to 
Congress (May 6, 2022), https://www.consumerfinance.gov/about-us/blog/the-cfpbs-2021-fair-lending-annual-report-to-congress/.
    \42\ CFPB, Support Spanish-speaking customers with Spanish-
language disclosures (May 11, 2022), https://www.consumerfinance.gov/about-us/blog/support-spanish-speaking-customers-with-spanish-language-disclosures/.
    \43\ Hallie Ryan, CFPB publishes Beginner's Guide to Accessing 
and Using Home Mortgage Disclosure Act Data (June 13, 2022), https://www.consumerfinance.gov/about-us/blog/cfpb-publishes-beginners-guide-to-accessing-and-using-home-mortgage-disclosure-act-data/.
    \44\ Sonia Lin, Identifying and addressing the financial needs 
of immigrants (June 27, 2022), https://www.consumerfinance.gov/about-us/blog/identifying-and-addressing-the-financial-needs-of-immigrants/.
    \45\ Tim Lambert, Using special purpose credit programs to serve 
unmet credit needs (July 19, 2022), https://www.consumerfinance.gov/about-us/blog/using-special-purpose-credit-programs-to-serve-unmet-credit-needs/.
    \46\ Patrice Alexander Ficklin, Makalia Griffith, and Tim 
Lambert, Mortgage Borrowers Can Challenge Inaccurate Appraisals 
Through the Reconsideration of Value Process (Oct. 6, 2022), https://www.consumerfinance.gov/about-us/blog/mortgage-borrowers-can-challenge-inaccurate-appraisals-through-the-reconsideration-of-value-process/.
    \47\ Feng Liu, Office of Research blog: Higher interest rates 
leading to higher debt burdens for mortgage borrowers (Nov. 30, 
2022), https://www.consumerfinance.gov/about-us/blog/higher-interest-rates-leading-to-higher-debt-burdens-for-mortgage-borrowers/.
    \48\ Woody Anglade, Patrice Alexander Ficklin, and Timothy 
Lambert, Changes to HMDA's closed-end loan reporting threshold (Dec. 
6, 2022), https://www.consumerfinance.gov/about-us/blog/changes-to-hmda-closed-end-loan-reporting-threshold/.
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    In 2022, the CFPB also issued 16 press releases related to fair 
lending and access to credit issues, including the announcement of: the 
publication of the CFPB's Justice-Involved Individuals and the Consumer 
Financial Marketplace Report; \49\ the publication of the SBREFA 
outline for the AVM rulemaking; \50\ the updated UDAAP exam guidance; 
\51\ Director Chopra's statement on the Interagency Task Force on 
Property Appraisal and Valuation Equity (PAVE) taskforce's report; \52\ 
the availability of 2021 HMDA data; \53\ a report on financial 
challenges facing rural communities; \54\ the issuance of an advisory 
opinion on the coverage of fair lending laws; \55\ the publication of a 
report on mortgage servicing metrics; \56\ the issuance of a CFPB 
Circular related to adverse action notice requirements under ECOA; \57\ 
the availability of the 2021 HMDA data; \58\ the Trident enforcement 
action; \59\ issuance of an interpretive rule laying out when digital 
marketing providers for financial firms must comply with Federal 
consumer financial protection law; \60\ a report detailing family 
finances and debt in rural Appalachia; \61\ the CFPB's Annual Report of 
Mortgage Market Activity; \62\ the CFPB's effort to spur opportunities 
for homeowners in the mortgage market; \63\ and publication of data 
from the National Survey of Mortgage Originations.\64\
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    \49\ CFPB, CFPB Report Shows Criminal Justice Financial 
Ecosystem Exploits Families at Every Stage (Jan. 31, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-shows-criminal-justice-financial-ecosystem-exploits-families-at-every-stage/.
    \50\ CFPB, Consumer Financial Protection Bureau Outlines Options 
To Prevent Algorithmic Bias In Home Valuations (Feb. 23, 2022), 
https://www.consumerfinance.gov/about-us/newsroom/cfpb-outlines-options-to-prevent-algorithmic-bias-in-home-valuations/.
    \51\ CFPB, CFPB Targets Unfair Discrimination in Consumer 
Finance (Mar. 16, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-targets-unfair-discrimination-in-consumer-finance/.
    \52\ CFPB, CFPB Director Chopra Statement on Appraisal Task 
Force Report (Mar. 23, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-director-chopra-statement-on-appraisal-task-force-report/.
    \53\ CFPB, 2021 HMDA Data on Mortgage Lending Now Available 
(Mar. 24, 2022), https://www.consumerfinance.gov/about-us/newsroom/2021-hmda-data-on-mortgage-lending-now-available/.
    \54\ CFPB, CFPB Releases Report on Financial Challenges Facing 
Rural Communities (Apr. 19, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-on-financial-challenges-facing-rural-communities/.
    \55\ CFPB, CFPB Issues Advisory Opinion on Coverage of Fair 
Lending Laws (May 9, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-advisory-opinion-on-coverage-of-fair-lending-laws/.
    \56\ CFPB, CFPB Releases Report on Mortgage Servicing Metrics 
(May 16, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-releases-report-on-mortgage-servicing-metrics/.
    \57\ CFPB, CFPB Acts to Protect the Public from Black-Box Credit 
Models Using Complex Algorithms (May 26, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-acts-to-protect-the-public-from-black-box-credit-models-using-complex-algorithms/.
    \58\ CFPB, FFIEC Announces Availability of 2021 Data on Mortgage 
Lending (June 16, 2022), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2021-data-on-mortgage-lending/.
    \59\ CFPB, CFPB, DOJ Order Trident Mortgage Company to Pay More 
Than $22 Million for Deliberate Discrimination Against Minority 
Families (July 27, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-doj-order-trident-mortgage-company-to-pay-more-than-22-million-for-deliberate-discrimination-against-minority-families/.
    \60\ CFPB, CFPB Warns that Digital Marketing Providers Must 
Comply with Federal Consumer Finance Protections (Aug. 10, 2022), 
https://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-that-digital-marketing-providers-must-comply-with-federal-consumer-finance- protections/.
    \61\ CFPB, CFPB Report Details Family Finances and Debt in Rural 
Appalachia (Sept. 1, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-details-family-finances-and-debt-in-rural-appalachia/.
    \62\ CFPB, CFPB Annual Report of 2021 Mortgage Market Activity 
Reveals an End to the Refinancing Boom and an Increase in Home 
Purchase Loans (Sept. 19, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-annual-report-2021-mortgage-market-activity-end-to-refinancing-boom/.
    \63\ CFPB, CFPB Launches Effort to Spur New Opportunities for 
Homeowners in the Mortgage Market (Sept. 22, 2022), https://www.consumerfinance.gov/about-us/newsroom/cfpb-launches-effort-to-spur-new-opportunities-for-homeowners-in-the-mortgage-market/.
    \64\ CFPB, CFPB and FHFA Publish Updated Data from the National 
Survey of Mortgage Originations for Public Use (Dec. 13, 2022), 
https://www.consumerfinance.gov/about-us/newsroom/cfpb-fhfa-publication-of-loan-level-data-for-public-use-collected-through-the-nsmo/.

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[[Page 43093]]

3.1.2. CFPB Engagements With Stakeholders
    The CFPB often engages directly with stakeholders to inform the 
CFPB's policy decisions and message the CFPB's priorities and recent 
work. In 2022, CFPB staff participated in 124 stakeholder engagements 
related to fair lending and access to credit issues. Through speeches, 
presentations, podcasts, roundtables, webinars, and other smaller 
discussions on fair lending topics, the CFPB strives to keep abreast of 
economic and market realities that impact the lives of individuals, 
small businesses, and communities the CFPB is charged with protecting.
    Throughout 2022, numerous other engagements centered around 
traditional and digital redlining, to include appraisal bias issues; 
algorithmic bias issues; special purpose credit programs; the 
rulemaking governing small business lending data collection and 
reporting under section 1071 of the Dodd-Frank Act; HMDA; agricultural 
and rural lending; student lending; and credit reporting.

3.2. Seeking Information: Request for Information

    On September 27, 2022, the CFPB issued a Request for Information 
(RFI) seeking insights on ways to improve mortgage refinances for 
homeowners who would benefit from refinancing, including Black and 
Hispanic borrowers. When interest rates decline, many borrowers benefit 
from the lower rates by refinancing their loans. Mortgage refinancing 
can be harder to access for borrowers with smaller loan balances. Black 
and Hispanic borrowers, who on average have smaller loans, have not 
participated in recent refinance booms at the same rate as white 
borrowers. The RFI sought innovative and timely ideas to address 
persistent market failures and to help borrowers access beneficial 
refinancing along with short- and long-term loss mitigation assistance. 
The comment period for this RFI closed on November 28, 2022.

3.3. Data and Reports

3.3.1. Justice Involved Individuals and the Consumer Financial 
Marketplace
    On January 31, 2022, the CFPB released a report reviewing the 
financial issues facing people and families who come in contact with 
the criminal justice system.\65\ The report describes an ecosystem rife 
with burdensome fees, lack of choice, and barriers to credit access, 
where families are increasingly being forced to shoulder the costs. It 
walks through the financial challenges families encounter at every 
stage of the criminal justice process, and the ways in which 
providers--often for-profit private companies--are leveraging a lack of 
consumer choice and the companies' market dominance to impose hefty 
fees at families' expense. The report also describes the barriers 
people face when reentering society from the criminal justice system, 
including some barriers to obtaining consumer and small business credit 
that may raise fair lending concerns. The burdens of the criminal 
justice system--and its financial impacts--fall most heavily on people 
of color, women, and people with lower incomes of all races and 
ethnicities. Surveys have repeatedly found women, and specifically 
Black women, disproportionately shoulder the costs of staying in touch 
with loved ones in prison and paying court-related debt for family 
members, sometimes spending up to a third of their income on such costs 
and even forgoing basic necessities for themselves.
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    \65\ CFPB, Justice Involved Individuals and the Consumer 
Financial Marketplace (Jan. 31, 2022), https://files.consumerfinance.gov/f/documents/cfpb_jic_report_2022-01.pdf.
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3.3.2. Medical Debt Burden in the United States
    Medical debt is the most common collection tradeline reported on 
consumer credit records. Unfortunately, as a result of inequities in 
wealth, occupation, income, insurance coverage, and access to care, 
people of color are more likely to have medical debt in collections. 
People also report being contacted by debt collectors about medical 
debt more than any other type of debt. While medical debt has long 
played an outsized role on credit reports, concerns about medical debt 
collections and reporting are particularly elevated due to the COVID-19 
pandemic. Many people have incurred pandemic-related medical debt. 
Black, Hispanic, and Native American communities have experienced 
higher rates of COVID-19 infection, in part because Black, Hispanic, 
and Native American people are more likely to be essential workers. 
Frontline workers may be particularly likely to have pandemic-related 
medical debt since they have more exposure to the virus but are less 
likely to have health insurance than the general population.
    On March 1, 2022, the CFPB released a report summarizing key areas 
of concern in medical debt collections and reporting.\66\ One such key 
finding was that medical debt affects households unevenly, as past-due 
medical debt is more prevalent among Black and Hispanic individuals 
than white and Asian individuals. Medical debt can have a compounding 
impact in reducing future access to credit, housing, and employment for 
populations who already face financial exclusion, including communities 
of color, low-income individuals, and uninsured or underinsured 
individuals.
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    \66\ CFPB, Medical Debt Burden in the United States (Mar. 1, 
2022), https://files.consumerfinance.gov/f/documents/cfpb_medical-debt-burden-in-the-united-states_report_2022-03.pdf.
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3.3.3. Special Issue Brief: New Data on the Characteristics of Mortgage 
Borrowers During the COVID-19 Pandemic
    On March 23, 2022, the CFPB released a report regarding the 
mortgage characteristics and demographics of borrowers who remained in 
COVID-19-related forbearance in January 2022.\67\ Utilizing data from 
the National Mortgage Database, this report followed up on a previous 
report in May of 2021 that analyzed the characteristics of mortgage 
borrowers during the COVID-19 pandemic based on the account status of 
borrowers reported through March 2021. The 2022 report found that 
borrowers had a forbearance rate of 1.3 percent, compared to 4.7 
percent in the March 2021 sample used in the previous May 2021 report. 
Although the overall forbearance rate decreased, the 2022 report also 
found, among other findings, that Black and Hispanic borrowers remained 
significantly more likely to be in forbearance compared to white 
borrowers. Specifically, Black and Hispanic borrowers were 2.8 times 
and 1.6 times more likely to end up in forbearance, respectively, than 
white borrowers.
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    \67\ CFPB, New Data on the Characteristics of Mortgage Borrowers 
During the COVID-19 Pandemic (Mar. 23, 2022), https://files.consumerfinance.gov/f/documents/cfpb_characteristics-of-mortgage-borrowers-during-covid-19-pandemic_report_2022-03.pdf.
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3.3.4. Availability of 2021 HMDA Data
    The HMDA data are the most comprehensive publicly available 
information on mortgage market activity. The data are used by consumer 
groups, regulators, industry, and others to assess potential fair 
lending risks and for other purposes.
    On March 24, 2022, the CFPB announced the availability of the 2021 
HMDA modified loan application register data on the FFIEC's HMDA 
Platform for approximately 4,300 HMDA filers.\68\ These published data

[[Page 43094]]

contain loan-level information filed by financial institutions, 
modified to protect privacy.
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    \68\ CFPB, 2021 HMDA Data on Mortgage Lending Now Available 
(Mar. 24, 2022), https://www.consumerfinance.gov/about-us/newsroom/2021-hmda-data-on-mortgage-lending-now-available/.
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    On June 16, 2022, the FFIEC announced the availability of 
additional data on 2021 mortgage lending transactions at 4,338 
financial institutions reported under HMDA.\69\ These data include a 
total of 48 data points providing information about the applicants, the 
property securing the loan or proposed to secure the loan in the case 
of non-originated applications, the transaction, and identifiers.
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    \69\ CFPB, FFIEC Announces Availability of 2021 Data on Mortgage 
Lending (June 16, 2022), https://www.consumerfinance.gov/about-us/newsroom/ffiec-announces-availability-of-2021-data-on-mortgage-lending/.
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3.3.5. Data Spotlight: Challenges in Rural Banking Access
    As part of the CFPB's renewed focus on the specific challenges of 
rural consumers and small businesses, on April 19, 2022, the CFPB 
released a report highlighting the consumer finance challenges faced by 
rural communities.\70\ This report is a starting point for a CFPB 
initiative that will include devoted engagement with rural communities 
across the country, research into challenges faced by rural 
communities, and actions to protect rural consumers and small 
businesses from predatory bad actors and repeat offenders in consumer 
and small business financial markets.
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    \70\ CFPB, Data Spotlight: Challenges in Rural Banking Access 
(Apr. 19, 2022), https://files.consumerfinance.gov/f/documents/cfpb_data-spotlight_challenges-in-rural-banking_2022-04.pdf.
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3.3.6. Mortgage Servicing COVID-19 Pandemic Response Metrics: New 
Observations From Data Reported by Servicers for May-December 2021
    On May 16, 2022, the CFPB published a report providing observations 
of data obtained from 16 large mortgage servicers to identify areas of 
risk in the servicers' COVID-19 pandemic responses.\71\ This report 
followed a previous 2021 response metrics report, and addresses similar 
topics including call center data, COVID-19 hardship forbearance exits, 
delinquency, and borrower profiles for the period May through December 
2021. As described in the report, some borrowers were impacted more 
than others. While the data on language preference was limited, among 
the servicers who provided language preference data, the percentage of 
borrowers in delinquency and who had a non-English language preference 
increased during the reviewed period. Conversely, the percentage of 
borrowers in delinquency and who identified English as their preferred 
language decreased.
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    \71\ CFPB, Mortgage Servicing COVID-19 Pandemic Response 
Metrics: New Observations from Data Reported by Sixteen Servicers 
for May-December 2021 (May 16, 2022), https://files.consumerfinance.gov/f/documents/cfpb_mortgage-servicing-covid-19-pandemic-response-metrics_report_2022-05.pdf.
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3.3.7. Consumer Finances in Rural Appalachia
    On September 1, 2022, the CFPB issued a report detailing consumer 
finances and debt in rural Appalachia.\72\ The report found that 
inhabitants of Appalachia face higher debt burdens and worse credit 
conditions compared to people in most other parts of rural America. In 
particular, medical debt collections are a much more prevalent issue 
among inhabitants of rural Appalachia, and consumers with medical debt 
collections often experience difficulties in making ends meet on other 
financial obligations.
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    \72\ Matthew Liu, Cooper Luce, Michael Orevba, Shawn Sebastian, 
and Cortnie Shupe, Consumer Finances in Rural Appalachia (Sept. 1, 
2022), https://files.consumerfinance.gov/f/documents/cfpb_consumer-finances-in-rural-appalachia_report_2022-09.pdf.
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3.3.8. Data Point: 2021 Mortgage Market Activity and Trends
    On September 19, 2022, the CFPB released its annual report on 
residential mortgage lending activity and trends for 2021.\73\ The 
report shows a shift from refinance loans in 2020 to home purchase 
loans in 2021, with a greater share of home purchase loans going to 
Asian, Black, and Hispanic white borrowers relative to the share of 
home purchase loans for non-Hispanic white borrowers. The top 25 
closed-end lenders by loan volume held nearly half of the market share 
of residential mortgage lending--a trend that has risen each year since 
2018. Other key findings of the report include that an increase in 
mortgage originations was driven by home purchase loans as refinance 
loans fell; the number of mortgage lending institutions reporting HMDA 
data dropped in 2021; and that Asian, Black, and Hispanic white 
borrowers' home purchase loan shares increased from 2020 to 2021. The 
report also found that Black and Hispanic white borrowers, overall, 
continued to qualify for lower median loan amounts, had lower median 
credit scores, and had higher denial rates compared to non-Hispanic 
white and Asian borrowers. Additionally, Black and Hispanic white 
borrowers paid higher median interest rates and higher total loan costs 
overall.
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    \73\ CFPB, Data Point: 2021 Mortgage Market Activity and Trends 
(Sept. 19, 2022), https://files.consumerfinance.gov/f/documents/cfpb_data-point-mortgage-market-activity-trends_report_2022-09.pdf.
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3.3.9. Updated Data From National Survey of Mortgage Originations
    On December 13, 2022, the CFPB and the FHFA published updated loan-
level data for public use collected through the National Survey of 
Mortgage Originations. The data provide insights into borrowers' 
experiences obtaining residential mortgages.\74\
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    \74\ CFPB, CFPB and FHFA Publish Updated Data from the National 
Survey of Mortgage Originations for Public Use (Dec. 13, 2022), 
https://www.consumerfinance.gov/about-us/newsroom/cfpb-fhfa-publication-of-loan-level-data-for-public-use-collected-through-the-nsmo/.
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3.1. Interagency Engagement

    Seeking to address current and emerging fair lending risks, the 
CFPB regularly coordinates with other Federal, State, tribal, county, 
municipal, and international government entities, policymakers, and the 
organizations that represent them. Through numerous interagency 
organizations and taskforces, the CFPB coordinated its 2022 fair 
lending regulatory, supervisory, and enforcement activities to promote 
consistent, efficient, and effective enforcement of Federal fair 
lending laws.
    The CFPB, along with the Department of Housing and Urban 
Development (HUD), FTC, FDIC, FRB, NCUA, OCC, DOJ, and FHFA, constitute 
the Interagency Task Force on Fair Lending. This Task Force meets 
regularly to discuss fair lending enforcement efforts, share current 
methods of conducting supervisory and enforcement fair lending 
activities, and coordinate fair lending policies. In 2022, the FDIC was 
the Chair of this Task Force.\75\
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    \75\ Additional activity has occurred since the close of this 
reporting period. In 2023, the NCUA became the Chair of the 
Interagency Taskforce on Fair Lending.
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    On February 22, 2022, the CFPB, along with HUD, FRB, DOJ, OCC, 
FDIC, NCUA, and FHFA, released an Interagency Statement on Special 
Purpose Credit Programs Under ECOA and Regulation B. The statement 
encourages lenders to explore opportunities available to them to 
increase credit access through special purpose credit programs to 
better serve historically disadvantaged individuals and 
communities.\76\
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    \76\ Bd. of Governors of the Fed. Reserve Sys., Fed. Deposit 
Ins. Corp., Nat'l Credit Union Admin., Office of the Comptroller of 
the Currency, Consumer Fin. Prot. Bureau, the Dep't of Hous. and 
Urban Dev., the Dep't of Justice, and the Fed. Hous. Fin. Agency, 
Interagency Statement on Special Purpose Credit Programs Under the 
Equal Credit Opportunity Act and Regulation B (Feb. 22, 2022), 
https://files.consumerfinance.gov/f/documents/cfpb_spcp_interagency-statement_2022-02.pdf.

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[[Page 43095]]

    Through the FFIEC, the CFPB has robust engagements with other 
partner agencies that focus on fair lending issues. For example, 
throughout the reporting period, the CFPB has chaired the HMDA/
Community Reinvestment Act (CRA) Data Collection Subcommittee, a 
subcommittee of the FFIEC Task Force on Consumer Compliance. This 
subcommittee oversees FFIEC projects and programs involving HMDA data 
collection and dissemination, the preparation of the annual FFIEC 
budget for processing services, and the development and implementation 
of other related HMDA processing projects as directed by this Task 
Force.
    The CFPB also participates in the Interagency Working Group on Fair 
Lending Enforcement, a standing working group of Federal agencies--with 
the DOJ, HUD, and FTC--that meets regularly to discuss issues relating 
to fair lending enforcement. The agencies use these meetings to also 
discuss fair lending developments and trends, methodologies for 
evaluating fair lending risks and violations, and coordination of fair 
lending enforcement efforts.
    The CFPB, the other FFIEC Federal agencies, HUD, and FHFA are the 
FFIEC's Appraisal Subcommittee (ASC) member agencies. The ASC's 
functions include providing Federal oversight of State appraiser and 
appraisal management company regulatory programs, and a monitoring 
framework for The Appraisal Foundation.\77\ The ASC has taken steps to 
promote fairness and equity in valuations, including by being a member 
of the PAVE Task Force.
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    \77\ During the reporting period, the CFPB Deputy Director Zixta 
Martinez served as Vice Chairperson of the ASC beginning on April 1, 
2022, and Regional Director John Schroeder served as Vice 
Chairperson of the ASC through February 16, 2022.
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    The CFPB engaged with other agencies on issues of bias in home 
appraisals through the PAVE Task Force. The PAVE Task Force is chaired 
by HUD Secretary Marcia Fudge and Assistant to the President for 
Domestic Policy and Director of the Domestic Policy Council, Ambassador 
Susan Rice.\78\ This Task Force also includes cabinet-level leaders 
from executive departments and additional members from independent 
agencies, including the CFPB. On March 23, 2022, the PAVE Task Force 
issued a report, Action Plan to Advance Property Appraisal and 
Valuation Equity: Closing the Racial Wealth Gap by Addressing Mis-
valuations for Families and Communities of Color.79 The 
report outlines the historical role of racism in the valuation of 
property, examines the various forms of bias that can appear in 
residential property valuation practices, and describes how government 
and industry stakeholders will advance equity through concrete actions 
and recommendations. Aside from its involvement in PAVE, the CFPB is 
also actively working with its interagency partners on issues of bias 
in home appraisals.
---------------------------------------------------------------------------

    \78\ Since the close of this reporting period, Ambassador Susan 
Rice left her position as Assistant to the President for Domestic 
Policy and Director of the Domestic Policy Council. It was announced 
on May 5, 2023, that Neera Tanden would replace Ambassador Rice as 
Assistant to the President for Domestic Policy and Director of the 
Domestic Policy Council. Ms. Tanden now also serves as co-chair of 
the PAVE Task Force.
    \79\ Interagency Task Force on Property Appraisal and Valuation 
Equity (PAVE), Action Plan to Advance Property Appraisal and 
Valuation Equity (Mar. 2022), https://pave.hud.gov/actionplan.
---------------------------------------------------------------------------

    In February 2022, senior staff from the CFPB, along with HUD, FRB, 
DOJ, OCC, FDIC, NCUA, and FHFA submitted a letter to the Appraisal 
Standards Board regarding proposed changes to the 2023 Edition of the 
Uniform Standards of Professional Appraisal Practice.\80\
---------------------------------------------------------------------------

    \80\ Patrice Alexander Ficklin, Consumer Fin. Prot. Bureau; Amy 
Frisk, Dep't of Hous. and Urban Dev.; Arthur Lindo, Bd. of Governors 
of the Fed. Reserve Sys.; Sameena Shina Majeed, Dep't of Justice; 
Donna Murphy, Office of the Comptroller of the Currency; Mark 
Pearce, Fed. Deposit Ins. Corp.; Timothy Segerson, Nat'l Credit 
Union Admin.; James Wylie, Fed. Hous. Fin. Agency, Letter to 
Michelle Czekalski Bradley (Feb. 4, 2022), https://files.consumerfinance.gov/f/documents/cfpb_appraisal-discrimination_federal-interagency_comment_letter_2022-02.pdf.
---------------------------------------------------------------------------

    As required by section 1022 of the Dodd-Frank Act, the CFPB also 
consults with other agencies as part of its rulemaking process. For 
example, in 2022, while developing its small business lending data 
collection final rule, the CFPB consulted or offered to consult with 
the FRB, FDIC, NCUA, OCC, HUD, DOJ, FTC, the Department of Agriculture, 
the Department of the Treasury, the Economic Development 
Administration, the Farm Credit Administration (FCA), the Financial 
Crimes Enforcement Network, and the Small Business Administration (SBA) 
including, among other things, on consistency with any prudential, 
market, or systemic objectives administered by such agencies.
    In addition to the established interagency organizations, CFPB 
personnel meet regularly with agency personnel, including with DOJ, 
HUD, FTC, FHFA, State Attorneys General, and the prudential regulators 
to coordinate and discuss the CFPB's fair lending work.

4. Amicus Program and Other Litigation

    The CFPB files amicus, or ``friend-of-the-court,'' briefs in 
significant court cases concerning Federal consumer financial 
protection laws, including cases involving ECOA. These briefs provide 
courts with the CFPB's views and help ensure that consumer financial 
protection statutes are correctly and consistently interpreted. In 
2022, no fair lending-related amicus briefs were filed. Information 
regarding the CFPB's amicus program, including a description of the 
amicus briefs it has filed, is available on the CFPB's website.\81\
---------------------------------------------------------------------------

    \81\ See generally, https://www.consumerfinance.gov/policy-compliance/amicus/.
---------------------------------------------------------------------------

    In September of 2022, the CFPB was sued in the U.S. District Court 
for the Eastern District of Texas by the U.S. Chamber of Commerce, et 
al., challenging the CFPB's update to the UDAAP section of its 
examination manual relating to the CFPA's prohibition on unfair 
practices. Litigation is currently ongoing.
    In August 2020, the CFPB was sued in the U.S. District Court for 
the District of Columbia by the National Community Reinvestment 
Coalition, et al., over the CFPB's final rule amending Regulation C to 
raise the loan-volume coverage thresholds for financial institutions 
reporting data under the 2020 HMDA Final Rule. On September 23, 2022, 
the District Court vacated the 2020 HMDA Final Rule's closed-end loan 
reporting threshold but upheld the rule's open-end reporting threshold. 
The decision means that the threshold for reporting data on closed-end 
mortgage loans is 25 loans in each of the two preceding calendar years, 
which is the threshold established by the 2015 HMDA Final Rule, rather 
than the 100-loan threshold set by the 2020 HMDA Final Rule.
    In 2019, the CFPB was sued in the U.S. District Court for the 
Northern District of California by the California Reinvestment 
Coalition, et al., regarding the CFPB's obligation to issue rules 
implementing section 1071. In February 2020, the court approved a 
stipulated settlement agreement. Among other things, the settlement 
agreement also provides a process for setting appropriate deadlines for 
the issuance of a proposed and final rule implementing section 1071. 
Following the timely issuance of a notice of proposed rulemaking, the 
comment period for the rulemaking closed on January 6, 2022.\82\ For a 
more

[[Page 43096]]

comprehensive update on 1071 activity, see section 2.1.1 of this 
report.
---------------------------------------------------------------------------

    \82\ Additional activity has occurred since the close of this 
reporting period. On March 30, 2023, the CFPB released its final 
rule implementing section 1071. See https://www.consumerfinance.gov/rules-policy/final-rules/small-business-lending-under-the-equal-credit-opportunity-act-regulation-b/.
---------------------------------------------------------------------------

5. Interagency Reporting on ECOA and HMDA

    The CFPB is statutorily required to file a report to Congress 
annually describing the administration of its functions under ECOA, 
summarizing public enforcement actions taken by other agencies with 
administrative enforcement responsibilities under ECOA, and providing 
an assessment of the extent to which compliance with ECOA has been 
achieved.\83\ In addition, the CFPB's annual HMDA reporting requirement 
calls for the CFPB, in consultation with HUD, to report annually on the 
utility of HMDA's requirement that covered lenders itemize certain 
mortgage loan data.\84\
---------------------------------------------------------------------------

    \83\ 15 U.S.C. 1691f.
    \84\ 12 U.S.C. 2807.
---------------------------------------------------------------------------

5.1. Reporting on ECOA Enforcement

    The enforcement and compliance efforts and assessments made by the 
eleven agencies assigned enforcement authority under section 704 of 
ECOA are discussed in this section, as reported by the agencies.
BILLING CODE 4810-AM-P

[[Page 43097]]

[GRAPHIC] [TIFF OMITTED] TN06JY23.000

BILLING CODE 4810-AM-C
5.1.1. Public Enforcement Actions
---------------------------------------------------------------------------

    \85\ Collectively, the Board of Governors of the Federal Reserve 
System (FRB), the Federal Deposit Insurance Corporation (FDIC), the 
National Credit Union Administration (NCUA), the Office of the 
Comptroller of the Currency (OCC), and the Bureau of Consumer 
Financial Protection (Bureau) comprise the Federal Financial 
Institutions Examination Council (FFIEC). The State Liaison 
Committee was added to FFIEC in 2006 as a voting member. Federeal 
Financial Institutions Examination Council, http://www.ffiec.gov 
(last visited Mar. 30, 2021).
    \86\ The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) was eliminated as a stand-alone agency within USDA in 2017. 
The functions previously performed by GIPSA have been incorporated 
into the Agricultural Marketing Service (AMS), and ECOA reporting 
comes from the Packers and Stockyards Division, Fair Trade Practices 
Program, AMS.
    \87\ 15 U.S.C. 1691c.
---------------------------------------------------------------------------

    In 2022, of the Federal agencies with ECOA enforcement authority, 
the CFPB, together with DOJ, brought one public enforcement action for 
violations of ECOA and the FTC brought two enforcement actions for 
violations of ECOA.
    On July 27, 2022, the CFPB, together with DOJ, brought a public 
enforcement action in Federal district court in the Eastern District of 
Pennsylvania against Trident Mortgage Company for unlawful 
discrimination against individuals and families living in majority-
minority neighborhoods in the greater Philadelphia area. For more 
information on the Trident enforcement action, see section 1.2.1 of 
this report.

[[Page 43098]]

    The FTC also brought enforcement actions for violations of ECOA. In 
2022, the FTC and the State of Illinois brought an enforcement action 
against Napleton, a large multistate auto group based in Illinois, 
alleging, among other things, that defendants violated the ECOA and 
Regulation B by discriminating against Black consumers, charging them 
more in financing for interest rate markups, and illegal junk fees for 
unwanted ``add-ons'' that they sneaked onto customers' bills.\88\ 
According to the FTC's complaint, among other things, defendants would 
often wait until the end of the hours-long negotiation process to slip 
junk fees for add-on products and services into consumers' purchase 
contracts, which can run as long as 60 pages. Defendants agreed to pay 
$10 million to settle all the charges, a record setting monetary 
judgment for an FTC auto lending case.\89\ Defendants are also required 
to establish a fair lending program that will, among other components, 
cap the amount of any additional interest markup they charge consumers.
---------------------------------------------------------------------------

    \88\ FTC v. North American Automotive Services, Inc., No. 22-cv-
01690 (N.D. Ill., filed Mar. 31, 2022), available at https://www.ftc.gov/legal-library/browse/cases-proceedings/2023195-napleton-auto. Chair Khan and Commissioner Slaughter issued a concurring 
statement. See Joint Statement of Chair Lina M. Khan and 
Commissioner Rebecca Kelly Slaughter in the Matter of Napleton 
Automotive Group (Mar. 31, 2022), available at https://www.ftc.gov/news-events/news/speeches/joint-statement-chair-lina-m-khan-commissioner-rebecca-kelly-slaughter-matter-napleton-automotive.
    \89\ FTC v. North Amer. Auto. Servs., Inc., No. 22-cv-01690 
(N.D. Ill. Mar. 31, 2022) (stipulated order for permanent 
injunction, monetary judgment, and other relief), available at 
https://www.ftc.gov/system/files/ftc_gov/pdf/6-1%20Stipulated%20Order.pdf.
---------------------------------------------------------------------------

    Also in 2022, the FTC brought an action in Federal court against 
Maryland-based Passport Automotive Group, alleging that defendants 
violated the ECOA and Regulation B, and also violated the FTC Act, by 
engaging in unfair practices, by discriminating against Black and 
Latino consumers, charging them higher financing costs and illegal junk 
fees.\90\ In its complaint, the FTC alleges, among other things, that 
Passport regularly advertised certified, reconditioned, or inspected 
cars at specific prices, but then added extra certification, 
reconditioning, or inspection fees that it falsely claimed consumers 
are required to pay, charging Black and Latino consumers more for the 
fees and imposing the fees more often. The FTC also alleges that 
Passport charged Black and Latino consumers hundreds of dollars more in 
financing costs for interest rate markups than White consumers. Among 
other things, Defendants agreed to pay more than $3.3 million to settle 
the FTC's lawsuit, which will be used to refund consumers harmed by 
Passport's conduct; the order also requires Defendants to establish a 
fair lending program to ensure against discrimination going forward, 
including requiring each Passport dealership to either charge no 
financing markup or charge the same markup rate to all consumers.\91\
---------------------------------------------------------------------------

    \90\ FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-02670-GLS (D. 
Md., filed Oct. 18, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint%20Passport%20Auto%20Group%2C%20Inc.%2C%20et%20al..pdf. 
This is the second FTC action against Passport in recent years. See 
https://www.ftc.gov/news-events/news/press-releases/2018/10/washington-dc-area-car-dealerships-marketing-firm-settle-deceptive-advertising-charges.
    \91\ FTC v. Passport Auto. Grp., Inc., No. 8:22-cv-02670 (D. Md. 
Oct. 18, 2022) (stipulated order for permanent injunction, monetary 
judgment, and other relief), available at https://www.ftc.gov/system/files/ftc_gov/pdf/Order%20As%20Filed.pdf.
---------------------------------------------------------------------------

5.1.2. Number of Institutions Cited for ECOA/Regulation B Violations
    In 2022, the Agencies and the CFPB collectively reported citing 174 
institutions with violations of ECOA and/or Regulation B.
5.1.3. Violations Cited During ECOA Examinations
    Among institutions examined for compliance with ECOA and Regulation 
B, the FFIEC agencies reported that the most frequently cited 
violations were as follows:

     Table 5--Regulation B Violations Cited by FFIEC Agencies, 2022
------------------------------------------------------------------------
                                                      FFIEC Agencies
          Regulation B violations: 2022                  reporting
------------------------------------------------------------------------
12 CFR 1002.4, 1002.7(d)(1): Discrimination--     NCUA,\92\ FRB,\93\
 Discrimination on a prohibited basis in a         OCC,\94\ CFPB.\95\
 credit transaction; improperly requiring the
 signature of the applicant's spouse or other
 person.
12 CFR 1002.5(b), 12 CFR 1002.5(c), 12 CFR        FDIC.
 1002.5(d): Inquiring about protected class--
 Inquiring about the race, color, religion,
 national origin, or sex of an applicant or any
 other person in connection with a credit
 transaction, except as permitted in Sec.
 1002.5(b)(1) and (b)(2), or Sec.   1002.8 in
 the case of a special purpose credit program;
 requesting any information concerning an
 applicant's spouse or former spouse, except as
 permitted in Sec.   1002.5(c)(2); requesting
 the marital status of a person applying for
 individual, unsecured credit, except as
 permitted in Sec.   1002.5(d)(1) (for credit
 other than individual, unsecured, a creditor
 may inquire about the applicant's marital
 status, but must only use the terms
 ``married,'' ``unmarried,'' and ``separated'');
 inquiring as to whether income stated in an
 application is derived from alimony, child
 support, or separate maintenance payments,
 except as permitted in Sec.   1002.5(d)(2); or
 requesting information about birth control
 practices, intentions concerning the bearing or
 rearing of children, or capability to bear
 children, except as permitted in Sec.
 1002.5(d)(3).
12 CFR 1002.6 (b)(2): Specific rules concerning   NCUA.
 use of information--Improperly evaluating age,
 receipt of public assistance in a credit
 transaction.
12 CFR 1002.9(a)(1)(i), (a)(2), (b)(1); (b)(2);   FDIC,\96\ NCUA,\97\
 (c): Adverse Action--Failure to provide notice    OCC,\98\ FRB,\99\
 to the applicant 30 days after receiving a        CFPB.\100\
 completed application concerning the creditor's
 approval of, counteroffer to, or adverse action
 on the application; failure to provide
 appropriate notice to the applicant 30 days
 after taking adverse action on an incomplete
 application; failure to provide sufficient
 information in an adverse action notification,
 including the specific reasons for the action
 taken.
12 CFR 1002.12(b)(1): Record Retention--Failure   OCC.
 to retain records of the original application
 or a copy thereof for 25 months after the data
 a creditor notifies an applicant of action
 taken on an application or of incompleteness.
12 CFR 1002.14 (a)(1), (a)(2), (a)(3), (a)(4):    FDIC,\101\ OCC,\102\
 Appraisals and Valuations--Failure to provide     FRB.\103\
 appraisals and other valuations.
------------------------------------------------------------------------

    Among institutions examined for compliance with ECOA and Regulation

[[Page 43099]]

B, the Non-FFIEC agencies reported that the most frequently cited 
violations were as follows:
---------------------------------------------------------------------------

    \92\ 12 CFR 1002.4(a).
    \93\ 12 CFR 1002.7(d)(1).
    \94\ 12 CFR 1002.7(d)(1).
    \95\ 12 CFR 1002.4(a); 12 CFR 1002.4(b).
    \96\ 12 CFR 1002.9(a)(2); (b)(2).
    \97\ 12 CFR 1002.9(a)(1); (a)(2);(b)(2).
    \98\ 12 CFR 1002.9(a)(1)(i); (a)(2); (b)(1); (b)(2).
    \99\ 12 CFR 1002.9(a)(1)(i); (b)(2).
    \100\ 12 CFR 1002.9(a)(2).
    \101\ 12 CFR 1002.14(a)(1)-(4).
    \102\ 12 CFR 1002.14(a)(1); (a)(2).
    \103\ 12 CFR 1002.14(a)(2).

 Table 6--Regulation B Violations Cited by Non-FFIEC Agencies Enforcing
                               ECOA, 2022
------------------------------------------------------------------------
                                                    Non-FFIEC Agencies
          Regulation B violations: 2022                  reporting
------------------------------------------------------------------------
12 CFR 1002.9(a)(1)(i): Adverse Action--Failure   FCA.
 to provide notice to the applicant 30 days
 after receiving a completed application
 concerning the creditor's approval of,
 counteroffer to, or adverse action on the
 application; failure to provide sufficient
 information in an adverse action notification,
 including the specific reasons for the action
 taken; failure to provide ECOA notice.
------------------------------------------------------------------------

    The AMS, SEC, and the SBA reported that they received no complaints 
based on ECOA or Regulation B in 2022. The FTC is an enforcement agency 
and does not conduct compliance examinations.
5.1.4. Referrals to the Department of Justice
    The Agencies assigned enforcement authority under section 704 of 
ECOA must refer a matter to DOJ when there is reason to believe that a 
creditor has engaged in a pattern or practice of lending discrimination 
in violation of ECOA.\104\ They also may refer other potential ECOA 
violations to DOJ.\105\ In 2022, four agencies (FDIC, NCUA, FRB, and 
CFPB) collectively made 23 such referrals to DOJ involving 
discrimination in violation of ECOA. This is an increase of 91 percent 
in such referrals from 12 in 2020. A brief description of those matters 
follows.
---------------------------------------------------------------------------

    \104\ 15 U.S.C. 1691e(g).
    \105\ Id.
---------------------------------------------------------------------------

    In 2022, the FDIC referred 12 fair lending matters to DOJ. The 
referrals included: two matters involving discrimination on the basis 
of national origin in auto loan pricing; one matter involving 
discrimination on the basis of sex in auto loan pricing; two matters 
involving discrimination on the basis of race in mortgage lending 
(redlining); one matter involving discrimination in underwriting 
consumer loans on the basis of marital status; two matters involving 
discrimination in underwriting credit cards on the basis of age; two 
matters involving discrimination in underwriting unsecured consumer 
loans on the basis of exercising rights under the Consumer Credit 
Protection Act; one matter involving discrimination in underwriting 
unsecured consumer loans on the basis of receipt of public assistance 
income; and one matter involving discrimination in pricing/underwriting 
of consumer loans on the basis of marital status.
    As reported in section 1.2.2 above, in 2022, the CFPB referred five 
fair lending matters to DOJ. The referrals included four matters 
involving discrimination on the basis of race and national origin in 
mortgage lending (redlining) and one matter involving discrimination in 
underwriting mortgage loans on the basis of receipt of public 
assistance income.
    In 2022, the NCUA referred five matters to DOJ. The referrals all 
involved discrimination in underwriting consumer loans on the basis of 
age, and one referral also involved discrimination in underwriting 
consumer loans on the basis of marital status.
    The FRB referred one matter to DOJ during the reporting period, 
which involved discouragement of applicants or prospective applicants 
in mortgage lending on the basis of marital status.\106\
---------------------------------------------------------------------------

    \106\ This referral also involved discrimination on the basis of 
familial status in violation of the Fair Housing Act.
---------------------------------------------------------------------------

5.2. Reporting on HMDA

    The CFPB's annual HMDA reporting requirement calls for the CFPB, in 
consultation with HUD, to report annually on the utility of HMDA's 
requirement that covered lenders itemize loan data in order to disclose 
the number and dollar amount of certain mortgage loans and 
applications, grouped according to various characteristics.\107\ The 
CFPB, in consultation with HUD, finds that itemization and tabulation 
of these data furthers the purposes of HMDA.
---------------------------------------------------------------------------

    \107\ 12 U.S.C. 2807.
---------------------------------------------------------------------------

6. Looking Forward: the Future of Fair Lending

    The ubiquity of advanced technologies throughout the consumer 
financial services marketplace calls for vigilance against 
discrimination using all of the CFPB's available tools. Advanced 
algorithmic technologies, as well as old technology now marketed as 
artificial intelligence, are now often used throughout the entire life 
cycle of financial services products. Beginning with the sophisticated 
digital marketing that targets individual consumers, continuing to the 
fraud screens and underwriting models that determine who gets offered 
credit and at what price, and finally to the chatbots and behavioral 
analytics that increasingly govern consumers' experience post-
origination, consumers increasingly cannot avoid these technologies. 
The CFPB has been increasing its expertise in data science and 
analytics to ensure that we can identify fair lending violations at 
each stage of the credit lifecycle and hold creditors and service 
providers accountable for fully complying with fair lending and other 
Federal consumer financial laws, regardless of the technology they 
choose to use.
    The CFPB is keenly focused on the risks that these technologies 
present to individual consumers, small businesses, communities, and the 
market as a whole. Big tech platforms, with their vast consumer 
surveillance and data harvesting infrastructure, have the potential to 
undermine fairness and competition. Some of these platforms are 
collecting and monetizing highly sensitive consumer data, including the 
types of data that are not appropriate to use in the context of a 
credit decision. Indeed, vast troves of sensitive data available about 
consumers that institutions using more traditional methods would never 
have used in a credit decisioning context are now fueling highly 
complex, black box algorithms. As affirmed by our Circular, Adverse 
Action Notification Requirements in Connection with Credit Decisions 
Based on Complex Algorithms, creditors must follow the law and provide 
statements of specific reasons to applicants against whom adverse 
action is taken, regardless of the technology they use.

[[Page 43100]]

    These risks, combined with digital marketing techniques that allow 
firms to target consumers with surgical precision and to leverage dark 
patterns, can have the potential to create an unfair marketplace that 
harms consumers and law-abiding institutions. As described in our 
interpretative rule, Limited Applicability of Consumer Financial 
Protection Act's ``Time or Space'' Exception to Digital Marketers, 
digital marketers acting as service providers can be held liable by the 
CFPB or other law enforcers for committing unfair, deceptive, or 
abusive acts or practices as well as other consumer financial 
protection violations.
    The CFPB will remain vigilant against these risks and encourages 
innovation that follows the law, promotes competitive markets, and 
delivers long-term benefits to consumers and small businesses in the 
form of sustainable financial products and services. For example, the 
CFPB is considering as part of its personal financial data rights 
rulemaking to implement section 1033 of the Dodd-Frank Act, options 
that would allow consumers to more easily walk away from companies 
offering bad products and poor service and move towards companies 
competing for their business with alternate or innovative products and 
services. Technology should be used to complement responsible banking, 
rather than to undermine it.
    The CFPB's work in 2022 underscored that financial service 
providers are expected to play by the same rules no matter what 
technology they use. In 2023, the CFPB will continue to guard against 
violations throughout the entire credit lifecycle. We will continue to 
develop our ability to leverage advanced data analytics to identify and 
remedy violations. Though some technologies may be billed as new, the 
risks of predation and exclusion that they may pose are not. The CFPB 
was founded in the wake of the 2008 financial crisis, when products 
initially billed as new and innovative resulted in catastrophic harm to 
consumers and communities across the country. The CFPB will continue to 
heed the lessons learned from that crisis. Product benefits based on 
atypical use cases should be questioned and tested to protect consumers 
and small businesses from future harm cloaked in vague promises of 
innovation and inclusion. The CFPB will continue to dedicate and 
develop resources to dive deeply into how financial institutions are 
using, understanding, testing, and improving these technologies through 
the entirety of the credit lifecycle.

Appendix A: Defined Terms

------------------------------------------------------------------------
               Term                              Definition
------------------------------------------------------------------------
AMS...............................  Agricultural Marketing Service of
                                     the U.S. Department of Agriculture.
ASC...............................  FFIEC's Appraisal Subcommittee.
AVM...............................  Automated Valuation Models.
CFPA..............................  Consumer Financial Protection Act of
                                     2010.
CFPB..............................  Consumer Financial Protection
                                     Bureau.
CRA...............................  Community Reinvestment Act.
Dodd-Frank Act....................  Dodd-Frank Wall Street Reform and
                                     Consumer Protection Act.
DOJ...............................  U.S. Department of Justice.
DOT...............................  U.S. Department of Transportation.
ECOA..............................  Equal Credit Opportunity Act.
FCA...............................  Farm Credit Administration.
FDIC..............................  Federal Deposit Insurance
                                     Corporation.
FHA...............................  Fair Housing Act.
FHFA..............................  Federal Housing Finance Agency.
Federal Reserve Board or FRB......  Board of Governors of the Federal
                                     Reserve System.
FFIEC.............................  Federal Financial Institutions
                                     Examination Council--the FFIEC
                                     member agencies are the Board of
                                     Governors of the Federal Reserve
                                     System (FRB), the Federal Deposit
                                     Insurance Corporation (FDIC), the
                                     National Credit Union
                                     Administration (NCUA), the Office
                                     of the Comptroller of the Currency
                                     (OCC), and the Consumer Financial
                                     Protection Bureau (CFPB). The State
                                     Liaison Committee was added to
                                     FFIEC in 2006 as a voting member.
FIRREA............................  Financial Institutions Reform,
                                     Recovery, and Enforcement Act of
                                     1989.
FTC...............................  Federal Trade Commission.
GIPSA.............................  Grain Inspection, Packers and
                                     Stockyards Administration of the
                                     U.S. Department of Agriculture.
GAO...............................  Government Accountability Office.
HMDA..............................  Home Mortgage Disclosure Act.
HUD...............................  U.S. Department of Housing and Urban
                                     Development.
MSA...............................  Metropolitan Statistical Area.
NCUA..............................  National Credit Union
                                     Administration.
OCC...............................  Office of the Comptroller of the
                                     Currency.
PAVE..............................  Property Appraisal and Valuation
                                     Equity.
RFI...............................  Request for Information.
SBA...............................  Small Business Administration.
SBREFA............................  Small Business Regulatory
                                     Enforcement Fairness Act of 1996.
SEC...............................  Securities and Exchange Commission.
UDAAP.............................  Unfair, Deceptive, or Abusive Acts
                                     or Practices.
USDA..............................  U.S. Department of Agriculture.
------------------------------------------------------------------------

Signing Authority

    The Director of the Bureau, Rohit Chopra, having reviewed and 
approved this document, is delegating the authority to electronically 
sign this document to Laura Galban, a Bureau Federal Register Liaison, 
for purposes of publication in the Federal Register.


[[Page 43101]]


Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2023-14197 Filed 7-5-23; 8:45 am]
BILLING CODE 4810-AM-P